Loans to services including NBFCs and aviation drive credit growth in May

economictimes.indiatimes.com:

On a year-on-year (y-o-y) basis, non-food bank credit rose 16.1 per cent in May as compared with 12.7 per cent a year ago according to latest data on sectoral deployment of bank credit released by the Reserve Bank of India on Friday. “Healthy balance sheets of banks and corporates are engendering a new credit and investment cycle and brightening the prospects of the Indian economy” the latest Financial Stability Report said.

Credit growth to services sector accelerated to 21.4 per cent (y-o-y) in May 2023 from 12.7 per cent a year ago, primarily due to the improved credit offtake to `aviation’(41 percent) and ‘Non-Banking Financial Companies (NBFCs)’ (27.6 per cent). Retail loans expanded by 19.2 per cent (y-o-y) in May 2023 vis-à-vis 16.3 per cent a year ago, mainly driven by ‘housing’ and ‘vehicle loans’, RBI said.

Credit growth to agriculture and allied activities accelerated to 16.0 per cent (y-o-y) in May 2023 from 11.7 per cent a year ago Credit to industry rose 6 per cent (y-o-y) in May 2023 as compared with 8.8 per cent in May 2022. Size-wise, credit growth to large industry was 3.9 per cent (2.1 per cent a year ago).

Credit to medium industries grew by 18.9 per cent (42.9 per cent last year) and micro and small industries by 9.5 per cent (32.7 per cent a year ago). Among major industries, credit growth (y-o-y) accelerated in May 2023 for ‘basic metal & metal products’, ‘beverage & tobacco’, ‘construction’ and ‘textiles’ as compared with the corresponding month of the previous year.